Judge blocks part of SAVE loan forgiveness plans after Arkansas sues

KUAR | By Josie Lenora

A judge has blocked part of a Biden era policy to forgive student loans.

The multi-state lawsuit was brought on by seven states including Arkansas, represented by Attorney General Tim Griffin. The suit was against President Joe Biden, Secretary of Education Miguel Cardona and the Department of Education.

The Savings on Valuable Education or “SAVE” plan changes the income threshold for paying back student loans. The plan also forgives loan borrowers after 120 payments if their balances are below $12,000. U.S. District Judge John Ross blocked that part of the law relating to loan forgiveness. It was set to take effect on July 1, and would have amounted to billions in loan forgiveness.

Judge blocks part of SAVE loan forgiveness plans after Arkansas sues

Susan Haejin Lee/NPR

Billions in student debt will not be forgiven after a judge blocked parts of the SAVE plan from going into effect.

Student loan repayments will cut billions from consumer spending

by Kim Souza (ksouza@talkbusiness.net)

Financial services firm Jefferies estimates student loan payments will cost U.S. consumers $18 billion a month by September. Some economists suggest the hit to household budgets will slow a national economy already slowing due to high interest rates and inflation.

“Americans owning student loan debt will have to pull back on other things like travel and restaurant spending to fit the resumed payments into their budgets. Belt-tightening could hurt an economy that relies heavily on consumer spending,” noted Jefferies economist Thomas Simmons.

Mark Zandi, chief economist at Moody’s Investor Services, predicts student loan borrowers will face an average of $250 a month in extra payments in September when the moratorium is lifted after more than three years. He said the loan repayments reduce consumer spending and will reduce economic growth by 0.2% in the final quarter of 2023.

https://talkbusiness.net/2023/06/student-loan-repayments-will-cut-billions-from-consumer-spending/

State might tax canceled student loan debt

by Jeff Della Rosa (JDellaRosa@nwabj.com)

Arkansas is one of seven states in which canceled student loan debt may be treated as taxable income, but whether it is, student loan forgiveness is expected to create a tax burden shift from the borrowers.

Recently, President Joe Biden announced plans to cancel up to $20,000 in student loan debt, depending on borrowers’ income. Pell Grant recipients qualify for up to the total amount in relief, while other borrowers can cancel up to $10,000 in student loan debt. Eligible borrowers must have an annual income of less than $125,000 or $250,000 for married couples or heads of households.

According to Federal Student Aid, an office of the U.S. Department of Education, nearly 8 million borrowers may be eligible for relief automatically because the agency already has relevant income data. By early October, an online application is expected to become available at studentaid.gov, allowing borrowers to apply for the relief. The application deadline will be Dec. 31, 2023.

https://talkbusiness.net/2022/09/state-might-tax-canceled-student-loan-debt/